The British Venture Capital Association (BVCA) has announced record results for 2000, with over GBP8 billion invested in 1,431 companies.
Of this total, GBP1.5 billion was invested in high tech companies and GBP1.9 billion of new funds were raised for future investment in high tech.
According to the BVCA’s annual Report on investment activity, worldwide investment by UK
private equity firms in 2000 reached a new record of GBP8.16 billion in 1,431 companies. Investment in the UK alone increased to GBP6.275 billion, representing 77 per cent of the total amount invested. The number of overseas companies backed increased by 36 per cent to
339, while investment grew by 12 per cent to GBP1,885 million. Commitments in the US more than doubled to GBP271 million. Of the amount invested overseas, 20 per cent was in early stage businesses compared to 7 per cent in 1999.
Start-up and early stage companies reached an all-time record, with investments in start-ups up by 55 per cent and in early stage by 32 per cent to GBP199 million and GBP288 million, respectively. The number of start-ups financed increased 52 per cent from 101 in 1999 to a record 154 in 2000.
However, a decrease was recorded in the amount invested in MBOs, down 22 per cent to GBP3.359 billion and the number of companies decreased by 26 per cent. The number of MBIs decreased by 25 per cent with GBP302 million invested, a 21 per cent decrease on 1999.
In terms of industry sector, UK high technology companies (including communications, computer, electronics, biotechnology and medical) received more private equity to back more businesses than any other industry grouping. A record GBP1,499 million was invested in 717 companies. Of these companies, computer-related companies accounted for two thirds.
Of the high technology companies that were backed, 47 per cent were start-up or early stage, with a further 46 per cent at expansion stage.
By number, divestments were slightly lower than the previous year at 967, while the amount divested rose from GBP1,269 million to GBP1,611 million. The majority of these divestments were via trade sales.
“The UK private equity industry continues to grow and flourish,” said David Thorp, BVCA chairman. “With the improved climate for early stage investing and more experience in this field, we have seen significant growth across the whole spectrum of start-up and early stage businesses.”